New ethanol standard a disappointment for Iowa ag interests

EPA's requirements for renewable fuels is less than Congress ordered

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Iowa agricultural and ethanol interests were disappointment Monday by the U.S. Environmental Protection Agency’s final ethanol volume requirements — more than proposed six months ago, but less than what Congress ordered.

The new quotas under the Renewable Fuel Standard will impose financial hardships on farmers, ethanol manufacturers and consumers, according to the Iowa Renewable Fuels Association.

Monte Shaw, the organization’s executive director, called it “a gut punch for consumers and farmers.”

Fuel suppliers will have to mix 16.93 billion gallons of corn-based ethanol and other renewables into gasoline this year, and 18.11 billion gallons in 2016, the EPA said.

Next year’s 18.11 billion gallons represents an increase from the EPA’s initial proposal in May of 17.4 billion proposal, but it falls well below the 22.25 billion target set by Congress in 2007.

The EPA also increased its mandate for advanced biofuels — cellulosic ethanol made from grasses, cornstalks, wood chips and other inedible materials — from 3.4 billion gallons in the May proposal to 3.61 billion gallons for 2016.

“With today’s final rule, and as Congress intended, EPA is establishing volumes that go beyond historic levels and grow the amount of biofuel in the market over time,” said Janet McCabe, acting assistant administrator for EPA’s Office of Air and Radiation.

McCabe said slower than anticipated growth in the cellulosic ethanol industry and lower gasoline demand render the original congressional mandates unrealistic.

Congress initially required steadily increasing volumes of biofuels be blended into the country’s gasoline and diesel fuels as a means of curbing dependence on foreign oil and reducing greenhouse gas emissions. The law also has stimulated demand for grain and, until recent years, contributed to higher commodity prices.

U.S. Agriculture Secretary Tom Vilsack called the rule “a positive step forward” and said it builds on the Obama administration’s and the USDA’s “commitment to biofuels and American grown renewable energy,” which he said has doubled since 2009.

Monday’s announcement included biodiesel targets of 1.9 billion gallons next year and 2 billion gallons in 2017.

Those volumes represent a modest increase over the May proposal, which called for 1.8 billion gallons in 2016 and 1.9 billion gallons in 2017.

“The final numbers set a precedent for growth, and Iowa farmers are appreciative of the certainty these numbers provide for the coming years,” said Osage farmer Wayne Fredericks, president of the Iowa Soybean Association.

The Iowa Corn Growers Association called the final rule a step backward.

“At a time when corn prices are below the cost of production, this will be a blow to Iowa’s rural economy,” said Decorah farmer Bob Hemesath, the group’s president.

Gov. Terry Branstad said the EPA missed an opportunity to provide more consumer choice at the pump, create jobs and increase incomes in rural America.

“Production is there. The technology and innovation to grow biofuels is there,” said Iowa Farm Bureau Federation President Craig Hill.

“But once again, the EPA continues to disappoint the American farmer.”

Iowa Agriculture Secretary Bill Northey said he sees no reason for investments in traditional ethanol or biodiesel plants because existing capacity is not being utilized.

“When you look at the numbers, they’re a little better than what their proposal was earlier this year, but they’re not challenging at all to the industry. They’re less than what the industry produced this year,” he said.

Both of Iowa’s U.S. senators, Republicans Chuck Grassley and Joni Ernst, expressed disappointment.

“This rule is a slight improvement but it still sells biofuels short,” said Grassley, who has urged the EPA to increase its volume obligations for renewable biofuels.

Rather than uphold congressional intent, he said, “the EPA took a flawed approach that seems to buy into Big Oil’s rhetoric.”

Ernst said the requirements for corn ethanol flout congressional intent and “fail to provide any incentives for expanding alternative fuel availability for consumers.”

The new numbers don’t go far enough, said U.S. Rep. Dave Loebsack, a Democrat.

“The RFS has proved it works. It creates jobs, supports our agricultural communities and lessens our dependence on foreign oil,” he said.

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